Friday, Feb. 03, 2012

Los Banos won't budge in Stonecreek dispute

Fate of annexation lawsuit is back in the hands of a judge

The city remains firm in its response to a revamped complaint from Stone- creek Properties in a nearly $40 million lawsuit involving a proposed annexation.

"They still have not met their burden of cause of action," said City Attorney William Vaughn.

Los Banos had until last Friday to answer Stonecreek's allegations. The judge will now consider whether to let the lawsuit continue.

Stonecreek Properties filed a $39.8 million lawsuit on Aug. 1 alleging that through negotiations in 2002 the city agreed to annex hundreds of acres for two projects known as Stonecreek South and Stonecreek North.

On Oct. 20, a Merced County judge declared the lawsuit did not have a proper cause of action.

Michael Dyer, Stonecreek's lawyer, filed an amended complaint on Dec. 27. It stated that in 2008, City Manager Steve Rath and the Planning Department "made a series of promises upon which plaintiffs relied upon to assist and recommend annexation of the property to the City Council."

Whether promises were made or not, the city completed the Stonecreek South project, which is now part of the city and includes the area south of Target and the former Lowe's building.

According to city records, Stonecreek North was originally an 850-acre project at the corner of Pacheco Boulevard and Badger Flat Road, across the street from Wal-Mart.

It eventually became a 362-acre plan that included housing for seniors, medical offices and retail stores. Stonecreek Properties purchased land in preparation for the annexation.

Stonecreek said that stall tactics were deployed, including requesting additional funds for an environmental impact report, putting the project on hold pending approval of a general plan, suggesting cutting the annexation in half and removing the residential portion of the project.

"They didn't get the run around," Vaughn said on Tuesday. "Just because they say it, doesn't mean it's true. They're the ones who changed their entire project."

Dyer was unable to be reached for comment.

On May 11, the project was at the Planning Commission level.

Commissioners recommended denial by a 6-1 vote after city staff raised concerns about added responsibilities for the city's Fire and Police departments and the maintenance of infrastructure, such as new sewer and water lines for the annexation.

The lawsuit states, "The city began a series of delay and blocking actions to make it impossible to bring the project to the City Council."

Vaughn rejects the assertion.

He said the proposal was taken off the council's agenda at the request of Stonecreek, not the city.

"There has been no position taken on this by the city. The council has not voted," Vaughn said.

It was revealed this week that the city has spent $25,000 defending itself against the Stonecreek Properties lawsuit.